Yes, his employer removed the code DD amount (as well as some other amounts in box 12) from Wages in boxes, 1, 3, and 5 before the W-2 was printed. This means that your son does not pay federal income tax, Social Security tax, nor Medicare tax on the code DD amount.
You can see a somewhat similar situation when an employee contributions to a 401(k) plan. This amount appears in box 12 on the W-2 with a code of "D"; however, this amount is removed only from Box 1, not from 3 or 5, so it is easier to see.
The code DD amount is "pre-tax" because it was never in your son's taxable income.
And, yes, the self-employed picture is quite different.
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